The sugar boom

Life is sweet

Record prices for the sticky stuff

MANOEUVRING a tractor up and down rows of sugarcane on his 3,000-acre (1,200 hectare) farm in Louisiana's Terrebonne Parish, Wallace Ellender, a fifth-generation farmer, shouts over the din that he is feeling an unfamiliar sense of optimism. With sugar prices at record highs recently, he anticipates sweet profits after two decades of hard times.

Louisiana is America's second-largest sugarcane producer, pumping $1.7 billion into a region with a historically high poverty rate made worse by the devastation of Hurricane Katrina. Almost all Louisiana's sugarcane farms are, like Mr Ellender's, family-owned; in Florida, America's top-producing sugar state, almost all of the sugar is in the hand of agribusiness.

Even so, the number of sugarcane farms in Louisiana has dwindled to 550 compared with 850 as recently as 2002, thanks to years of stubbornly low sugar prices and rising fuel and fertiliser costs. “It's been killing us,” says Mr Ellender, who has seen many of his friends and neighbours lose their farms.

But the price per pound of American raw sugar has doubled in the past year and reached a peak of 40 cents per pound in February, retreating only slightly last month. The spike has prompted confectionery and sweet cereal manufacturers including Hershey, Kraft and General Mills to warn that they will have to raise prices and lay off workers if America does not ease import restrictions on foreign sugar—a move the Department of Agriculture (USDA) indicated earlier this month that it is considering. America's powerful sugar lobby is vehemently opposed, and cites the security of the home-grown supply.

The cause of the price hike is, mostly, voracious consumption. According to the American Sugar Alliance, a trade group based in Washington, DC, the average American eats 44 pounds (20kg) of sugar per year, which means the population cumulatively eats 25% more than the country can produce from sugarcane and beets. Even with quotas, the alliance says, America is the second largest sugar importer in the world, after Russia.

Besides, the world's collective tooth is getting sweeter. Increasing wealth in developing countries has raised demand for the nicer things in life, just as economic insecurity in developed countries means more people are reaching for the cookie jar for comfort. The USDA estimates that worldwide sugar consumption will increase by 1.5m tons this year.

And supply is tightening. Monsoons and bad weather last year damaged sugar crops in India and Mexico; and the largest sugar exporter, Brazil, now uses half the sugar it produces to make ethanol. All of which is good news for Mr Ellender. Sugar is an ingredient in 70% of manufactured food; so he knows he's growing a crop that benefits from sticky demand.